Listen, the easiest (and most probable) way for the creators of KOTOR 3 to go would be to jump 1000 or so years into the future. It's still 2000-3000 years prior to the beginning of the movie lines, and it's far enough after the events of the first two KOTORS to make the events and places your characters visited obsolete. Like Jolee implied in the original... The history of the galaxy is loaded with different wars and heroes... After awhile, most are forgotten.

The best thing about KOTOR is also its weakness. Too many different possibilites. Dark side, light side, male, female, a crap load of mini quests makes making a sequel pretty damm hard. I wouldnt mind seeing KOTOR becoming like final fantasy, keep the name but different games having nothing to do with each other. I wouldnt mind seeing KOTOR 3 being a brand new game that has nothing to do with the other 2.

Its up to obsidian or whoever is making KOTOR 3 to decide but im sure they will make KOTOR 3 a sequel to finish revan's story